Hoosier moonshine trickles into the marketplace with Bear Wallow Distillery

Bear Wallow Distillery Production Manager Adam Spagnuolo checks the spirit safe on the receiving tank to check the proof of corn whiskey being produced at the distillery, Indiana's first retail distillery, on Wednesday, July 30, 2014. The distillery, with retail, production and bottling space, opens on August 1 in Nashville at 4484 E. Old State Road 46, about five miles east of Nashville proper. Spagnuolo uses corn, wheat, rye and malted barley grain for production of their whiskeys, which take seven days to make, from grain to bottle or barrel. (Photo: Charlie Nye/The Star)

Bear Wallow Distillery Production Manager Adam Spagnuolo holds a handful of milled corn on Wednesday, July 30, 2014 that he and his family uses to produce whiskey at Indiana's first retail distillery, opening August 1 in Nashville in a leased 4,000-square-foot building at 4484 E. Old State Road 46, about five miles east of Nashville proper. Spagnuolo uses corn, wheat, rye and malted barley grain for production of their whiskeys, which take seven days to make, from grain to bottle or barrel. (Photo: Charlie Nye/The Star)

Bear Wallow Distillery Production Manager Adam Spagnuolo, left, and his mother, Susan Spaguolo, talk outside their 4,000-square-foot facility at 4484 E. Old State Road 46, about five miles east of Nashville proper, on Wednesday, July 30, 2014. They are the only two full-time employees of the family-run business, Indiana's first retail distillery that opens August 1. (Photo: Charlie Nye/The Star)

Bear Wallow Distillery's retail area. The Nashville business, owned by the Spagnuolo family, opened for business to the public on Aug. 1. The distillery, in a leased 4,000-square-foot building at 4484 E. Old State Road 46, about five miles east of Nashville proper, is Indiana's first retail distillery to open. (Photo: Charlie Nye/The Star)

Bear Wallow Distillery Production Manager Adam Spagnuolo, left, is shown with his parents, Susan and Mike Spagnuolo, in the retail area of the 4,000-square-foot facility at 4484 E. Old State Road 46, about five miles east of Nashville proper, on Wednesday, July 30, 2014. Adam and Susan are the only two full-time employees of the family-run business, Indiana's first retail distillery that opens August 1. (Photo: Charlie Nye/The Star)

Susan Spagnuolo puts a shot of the Bear Wallow Distillery's corn whiskey Moonshine. It opens to the public on Aug. 1 in a leased 4,000-square-foot building at 4484 E. Old State Road 46, about five miles east of Nashville proper and is Indiana's first retail distillery to open. (Photo: Charlie Nye/The Star)

Susan Spagnuolo shows labels for the corn whisky Moonshine that she and her family will sell as they open Indiana's first retail distillery, Bear Wallow, on August 1 in Nashville in a leased 4,000-square-foot building at 4484 E. Old State Road 46, about five miles east of Nashville proper. Bear Wallow had still-maker Vendome specially make a hand-crafted copper still for the production of Indiana corn whiskey and unaged bourbon mash bill that it will sell at the distillery, which includes space for retail, production and bottling of their whiskeys -- Bear Trap, Liar's Bench and Hidden Holler Moonshine. Moonshine Shakeups will also be available. The restriction on distilleries in Indiana was a blue law throwback to prohibition, but in 2013 the General Assembly allowed craft distilleries to open. (Photo: Charlie Nye/The Star)

Bear Trap handcrafted whiskey produced by Bear Wallow Distillery, Indiana's first retail distillery that opens August 1 in Nashville in a leased 4,000-square-foot building at 4484 E. Old State Road 46 The business is owned and operated by the Spagnuolo family. Photographed on Wednesday, July 30, 2014. (Photo: Charlie Nye/The Star)

Renowned still-maker Vendome specially made this hand-crafted copper still for Bear Wallow Distillery, 4484 E. Old State Road 46, Nashville, Indiana's first retail distillery. The still, shown on Wednesday, July 30, 2014, is used for the production of Indiana corn whiskey and unaged bourbon mash bill that it will sell at the distillery -- Bear Trap, Liar's Bench and Hidden Holler Moonshine. Moonshine Shakeups will also be available. At left is one of two fermenters and at right is the receiving tank. (Photo: Charlie Nye/The Star)

The bottling machine at Bear Wallow Distillery, 4484 E. Old State Road 46, Nashville, is shown on Wednesday, July 30, 2014. The business, owned by the Spagnuolo family, opens to the public on Aug. 1 as Indiana's first retail distillery. (Photo: Charlie Nye/The Star)

Shot glasses are lines up in the retail area of Bear Wallow Distillery on Wednesday, July 30, 2014. The Nashville business, owned by the Spagnuolo family, opens to the public on Aug. 1 as Indiana's first retail distillery. (Photo: Charlie Nye/The Star)

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Renowned still-maker Vendome made this hand-crafted copper still for Bear Wallow Distillery, Nashville, Ind.’s first retail distillery. The still is used for the production of Indiana corn whiskey and unaged bourbon mash bill that will be sold at the distillery – Bear Trap, Liar's Bench and Hidden Holler Moonshine. At left is one of two fermenters and at right is the receiving tank.
(Photo:
Charlie Nye/The Star
)

Indiana's first artisan distilleries have fired up their copper stills and begun serving up a mix of trendy spirits in glass jars, marking the beginning of what promoters hope will become a Hoosier tourism market akin to the Kentucky Bourbon Trail.

Bear Wallow owners Mike and Susan Spagnuolo believe Indiana is thirsty for home-grown craft spirits. They're distilling both straight up and flavored 'shines, and a variety of cocktails. The distiller also will roll out rye whiskeys and bourbons over time.

Not too long ago, state law would have labeled the Spagnuolos as bootleggers. Distilling alcohol for retail sale had been prohibited since the end of Prohibition, leaving the art of making moonshine, whiskeys and other hard liquor to the purview of little-known wholesalers and, sometimes, daring bootleggers with illegal, makeshift backyard stills.

But spurred by the burgeoning local wine and craft beer industries, the Indiana legislature in 2013 made it legal for Hoosiers to open small, artisan distilleries to offer samples of spirits, and to sell drinks and carryout bottles.

Now, Huber and Bear Wallow are on the forefront of the new frontier that could sprout legal stills throughout the state. The industry, some say, has the potential to put Indiana on the craft liquor map.

"I think distilling has the same potential as wine and craft beer," said Jake Oakman of the Indiana Office of Tourism Development. "Indiana grows all of the right agricultural ingredients, so there's no reason we can't have a bourbon trail, so to speak, in our state."

Brewers, winery, spur change

Restrictions on alcohol sales began as "blue laws" after Prohibition ended. The laws were first passed by Indiana in 1935 and slowly eroded over the next decades. Once aimed at promoting religious standards, the laws are now discussed in terms of economics and public policy.

In 2013, three popular Indiana craft alcohol businesses — Huber's, plus Sun King and 3 Floyds breweries — convinced the legislature that embracing the distilling industry would be a boon for economic development and tourism.

Neighboring Michigan, Ohio and Illinois all have embraced retail hard alcohol to one extent or another. Kentucky, of course, thrives on bourbon.

But, the ban on retail distilling has frustrated business owners such as Ted Huber for decades. He can see the impact that distilleries can have on the economy and tourism in Kentucky from his nearly 700-acre family farm in Starlight, just across the Ohio River from Louisville.

Huber already draws 600,000 people a year to the farm, which traditionally has made wine and brandy. Many are curious bourbon trail tourists, though, in search of a quarter shot of bourbon — the traditional sample on the Kentucky tours. And Huber has been able to offer only a glass of wine or snifter of brandy.

Now he can cash in, estimating he can lure another 100,000 guests in coming years. With the change in law, he's preparing to open a 12,000-square-foot distillery on the family farm, where he'll produce spirits from several copper stills.

Huber already has begun selling corn vodka, which he describes as smoother, lighter and slightly sweeter than traditional vodka distilled from potatoes. By October, he'll begin selling gin, the first line of which will add flavors reminiscent of grapefruit, dried orange peals and lemon to the traditional juniper.

He's also planning to sell bourbons and whiskeys, but those can take years to age.

"The bourbon, we are playing with," he said. "We are trying to make an Indiana bourbon. Being this close to Louisville, we don't want to follow right behind Kentucky."

While Huber has already filled his copper stills, Sun King and 3 Floyds each say they've been too busy concentrating on their booming beer businesses to open distilleries so soon.

Sun King had planned to distill in a building near its College Avenue brewery, but instead needed that space to expand the beer-making business.

"We are casually pursing distilling," said Sun King co brewer/owner Clay Robinson. "We are in the unique position where our primary business, which is making beer, has continued to grow, expand and explode."

While the brewers and wineries lobbied to change state law, local entrepreneurs are taking advantage of the opportunity to try their hands at the still.

Jeff Wuslich, 33, Bloomington, will open Cardinal Spirits this fall in a 5,000-square-foot building at 922 S. Morton St., Bloomington.

He also has begun forming a distillers guild and is working with hopeful master distillers throughout the state. Many are in the early planning stages.

"I think Indiana is well suited to produce some of the greatest spirits in America," Wuslich said. "Anything Kentucky has, we have more of, and better quality."

The Spagnuolos, both 52, think Brown County, with its mix of eclectic shops, arts flair, outdoorsy entertainment and local eateries is perfect for an artisan distillery. Big Woods Brewery opened earlier this year and has been packing in customers.

Named after the real hiding place of a long-ago Indiana bootlegger, Bear Wallow's 4,000-square-foot building looks like little more than an industrial site from the outside.

But inside, the distillery is modeled with a rustic feeling, constructed with shelves and walls made locally with rough hand-hewed wood and other local materials.

This fall, they'll add flavored moonshines, including apple pie, blackberry and peach. By next year, they'll begin opening the whiskeys and bourbons currently aging in barrels.

Jane Ellis, executive director of the Brown County Convention and Visitor's Bureau, believes the distillery will emerge as a boon for tourism.

"We are very excited to have it," she said. "We've seen an impact from the new micro brewer, Big Woods, and we really expect the same from the distillery."

Building a lasting industry

Opening a distillery has proven a risky endeavor, and Indiana's new mixers say the state could make it a little easier.

The Spagnuolos say governmental and insurance requirements cost them an additional $25,000, including opening a full-service kitchen, operating in a building 50 feet from other structures and adding materials to dampen potential explosions.

Distillers already face stricter federal restrictions than breweries and wineries, including FBI background checks. The Spagnuolos, and other distillers, are hoping state lawmakers will ease some restrictions in the 2015 session to help spur business, potentially including:

■ Eliminating a restriction on selling carryout bottles on Sunday. Breweries and wineries can sell carryout-out on Sundays in Indiana, but distillers face the same restrictions as grocery stores, pharmacies, liquor stores and convenience stores.

■ Eliminating a requirement that applicants for artisan permits must have either been operating a winery or brewery for at least three years, or apply for a distillery permit and wait three years.

■ Eliminating a restriction from opening an off-site tasting room. Bear Wallow, for instance, would like to offer drinks nearer downtown Nashville.

Changes won't come easily, though. Lawmakers built in many of those restrictions because they think selling hard alcohol directly to customers is risky business.

To ensure distillers stay small and local, the law also restricts distilleries from selling more than 10,000 gallons of alcohol, and to making the majority of the product locally with local materials.

Time will tell, but changes likely could take years. Rep. Ed Clere, R-New Albany, championed the law for three years before finding the right mix of regulations to appease a majority of lawmakers in 2013.

"I'm open to considering changes," he said, "but I also think we have a pretty good framework in place. If we make changes, there will have to be a sound public policy for doing so."